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Iran’s ‘Misery Index’ Jumps As U.S. Oil Sanctions Cripple Economy

Tehran flag

Iran’s ‘misery index’—an informal measure of an economy that adds inflation to the unemployment rate—more than doubled this past winter, jumping to 39 percent from 19.4 percent in the previous winter, and is likely to further spike as the U.S. sanctions are crippling the Iranian economy and its main export revenue generator, oil.

According to data from the Statistical Center of Iran (SCI), cited by the National Council of Resistance of Iran, the fourth quarter of Iran’s calendar year—December 2018 through March 2019—saw inflation rate surging to 26.9 percent and unemployment rate at 12.1 percent.

After March, Iran’s inflation in the spring further soared and stood at 37.6 percent in June, according to the National Council of Resistance of Iran.

The ‘misery index’ is set to further increase after the U.S. removed all sanction waivers for Iranian oil buyers, leading to another plunge in Iran’s exports.

One week before the end of June, Iran’s oil exports were estimated to have dropped to 300,000 bpd or lower, Reuters reported, citing industry sources and tanker data. Iranian exports in May are estimated at 400,000 bpd-500,000 bpd.

Iran’s economy contracted by 4.9 percent in the 2018-2019 year ended in March, slipping further into recession as diminishing oil exports due to the U.S. sanctions are depriving the Islamic Republic of its economic lifeline—oil revenues.

The 4.9-percent contraction between March 2018 and March 2019, reported by the Statistical Center of Iran, is likely to worsen further as the U.S. removed all sanction waivers for Iranian oil buyers as of May 2.

According to the International Monetary Fund (IMF), Iran’s economy is expected to shrink by 6 percent this year, while the annual inflation will spike to 37.2 percent.  

A World Bank report from June showed that Iran’s annual inflation had risen sharply from about 10 percent in the middle of 2018 to about 52 percent in April 2019, “contributed by a depreciation of the rial in the parallel market of more than two-fold compared to levels prior to the announcement of U.S. sanctions in April 2018.”

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on July 09 2019 said:
    Let us first expose the lies. The claim by Reuters citing industry sources and tanker data that Iran’s oil exports had dropped to 300,000 barrels a day (b/d) at the end of June lacks proof and therefore it is a plain lie. When Reuters cites industry sources without giving an identifiable source, you can bet your last dollar that it is a lie.

    66% of total Iranian crude oil exports of 2.125 million barrels a day (mbd) amounting to 1.4 mbd have been going to China, India and Turkey. These countries have never stopped even for one minute importing Iranian crude irrespective of US sanctions. To this could be added a minimum of some 10% amounting to 213,000 b/d still going to the European Union (EU) and some 7% or 149,000 b/d still being imported by Japanese refineries despite the expiration of the sanction waivers in May. All in all, some 1.76 mbd or 83% of Iran’s crude oil exports are still finding their way to customers around the world.

    And with brutal and intrusive US sanctions against it, one would expect Iran’s economy to contract and unemployment to rise. Russia’s economy which is highly developed and is more than six times bigger than Iran’s contracted by more than 3% and the rouble devalued by more than 60% against the dollar as a result of US sanctions imposed on Russia in 2014. Still, the Russian economy has not only rebounded but has been growing significantly.

    Changes in the fundamentals of an economy facing severe hardships can’t be measured by what is stupidly dubbed as ‘misery index’ because it conveys the meaning of a country facing its difficulties with apathy. This ignores the sense of defiance that the Iranians can display in the face of adversity.

    A stupid and meaningless ‘misery index’ can’t gauge aspects of the Iranian national mentality that would undermine the impact of any economic sanctions. It is the martyr’s streak that the story of Ali, revered by Shi’ites as the true heir of the Prophet Mohammed, inspires. This sense of martyrdom could mean Iranians might prove not only unexpectedly resilient but could even draw strength from any economic hardship provided the leadership portrayed the price the Iranian people have had to pay against US sanctions as both just and patriotic.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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